Memorandum by the Under Secretary of State (Phillips)
The Italian Ambassador said that he was making his call this morning knowing that I was not in a position yet to give him any definite information with regard to the nature of our reply to the inquiry of the Committee of Coordination of the League. He said, however, that his duty, as ambassador, was to call at the State Department and to receive whatever impression I felt that I could convey to him, that other Italian Ambassadors in other capitals were on the same errand and that he had, as a matter of fact, received this morning telegrams from Rome, indicating the nature of the replies which had been received from other capitals.
I said that the communication from Geneva was received here late yesterday and had only reached our desks this morning, that we were studying it and considering the nature of our reply; beyond that I could say nothing because there was nothing to communicate with any certainty or any degree of intelligence. The Ambassador replied that he fully expected that this would be the case and he did not pursue his inquiry any further. He mentioned that the Italian representatives in Argentina and in Brazil had both reported a hesitation on the part of those Governments to apply any sanctions, in spite of their votes in favor of sanctions in Geneva. Signor Rosso referred especially to the case of the Argentine Government, which felt, for various reasons,—those of policy and practicability—that it would be difficult for Argentina to go forward with other states members of the League in whatever decision they should reach with respect to sanctions. The Italian Government’s information from Berlin showed uncertainty as to whether Germany would cooperate with the League; the Italian representative there had reported a feeling in German circles that the application of sanctions would even further complicate the economic and political situation in Europe, but that no decision had yet been taken.[Page 851]
The Ambassador referred to his last conversation with me on October 16th,57 during which he had expressed his opinion that this Government was, in fact, applying sanctions to Italy. As tending to support this opinion, the Ambassador referred to a report from the Italian representative in Geneva at the time when the question of the refusal of credits to Italy was being discussed. It appears that, during these discussions, the British representative had reminded those present that the United States had adopted a definite attitude with regard to the extension of credit and that the League members must not, on any account, fall behind what the United States had already done. In other words, the Italian representative in Geneva had reported to his Government that the League members intended to follow the decision already taken by the United States in the matter of credit extension. Signor Rosso said that he was puzzled when he had received this report because he did not know of any action taken by this Government other than the Johnson Act,58 which, of course, when passed, did not apply to this emergency, but he supposed that it was the response of American banks to the general warning put out by this Government to discourage commercial relations with the belligerents, which was responsible for Geneva’s impression. I said that the Ambassador was correct in thinking that we had taken no steps whatsoever beyond those he had in mind, which applied to both belligerents. I reminded him that the inquiries of the Treasury, through the Federal Reserve Bank of New York, applied to both belligerents and were merely a Treasury check, in order to guard against any possible undermining of the President’s Proclamation.
The Ambassador then referred to a telegram just received, indicating that the British Government was preparing to put pressure on the Government of Egypt to remove Italy from the enjoyment of capitulatory rights. This Signor Rosso regarded as another attempt to apply a damaging sanction to Italy. The Italian Ambassador in London had been instructed to approach the Foreign Office and to remonstrate against any such move on the part of Great Britain and, in doing so, to point out that the whole set-up of capitulatory rights enjoyed by other nations would be greatly weakened if Egypt undertook to drop Italy from the enjoyment of such privileges.
Signor Rosso said he was giving us this merely as a matter of information and as surely of interest to us.59
Before he left I asked the Ambassador how he felt about the present situation and whether he was more hopeful as a result of the reports today from abroad. He said undoubtedly there was a “détente” in the situation and that the assurances and explanations which had been [Page 852] given by the British Government with regard to the British Fleet now in the Mediterranean had undoubtedly had a very calming influence on the Italian public. At this point I read to the Ambassador the press flashes just received of Sir Samuel Hoare’s speech this morning in the House of Commons. These assurances of Sir Samuel, the Ambassador thought, would certainly tend to help the situation.